Real Money

Barclays upgraded Pier 1 Imports (PIR) to "overweight" from "equal weight" and set a $23 price target. The firm cited one-off operational challenges and expectations that high capex payoff will start in 2014 as the reasons for the move.

NEW YORK (TheStreet) -- Barclays upgraded Pier 1 Imports (PIR) to "overweight" from "equal weight" and set a $23 price target. The firm cited one-off operational challenges and expectations that high capex payoff will start in 2014 as the reasons for the move.

Separately, TheStreet Ratings team rates PIER 1 IMPORTS INC/DE as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PIER 1 IMPORTS INC/DE (PIR) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

PIR's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that PIR's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.

41.57% is the gross profit margin for PIER 1 IMPORTS INC/DE which we consider to be strong. Regardless of PIR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PIR's net profit margin of 8.25% compares favorably to the industry average.

PIER 1 IMPORTS INC/DE's earnings per share declined by 29.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PIER 1 IMPORTS INC/DE reported lower earnings of $1.03 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.25 versus $1.03).

PIR, with its decline in revenue, slightly underperformed the industry average of 6.3%. Since the same quarter one year prior, revenues slightly dropped by 6.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.